National Disability Services Submission:
Joint Standing Committee
National Disability Insurance Scheme
(NDIS) General Issues Inquiry
National Disability Services 1
About National Disability Services
National Disability Services (NDS) is Australia’s peak body for disability service
organisations, representing more than 1000 service providers. Collectively, NDS
members operate several thousand services for Australians with all types of disability.
NDS provides information and networking opportunities to its members and policy
advice to State, Territory and Commonwealth governments. We have a diverse and
vibrant membership, comprised of small, medium and larger service providers,
employing 100,000 staff to provide support to half a million of people with disability.
NDS is committed to improving the disability service system to ensure it better supports
people with disability, their families and carers, and contributes to building a more
inclusive community.
National Disability Services 2
Contents
About National Disability Services ………………………………………………………………………. 2
Contents …………………………………………………………………………………………………………. 3
1.0 Overview …………………………………………………………………………………………………… 4
2.0 Scope of submission …………………………………………………………………………………… 4
3.0 State of the disability sector …………………………………………………………………………. 5
4.0 Workforce Census ………………………………………………………………………………………. 7
5.0 The importance of market stewardship in the NDIS …………………………………………. 8
The crucial role of NDIA market stewardship in the NDIS ……………………………………. 8
Conflict of Interest: Setting fair prices while containing Scheme costs …………………. 11
Business dynamism: A sign of a healthy market? …………………………………………….. 12
6.0 Strategic pricing for a sustainable NDIS ……………………………………………………….. 13
Pricing and its impact on the market ………………………………………………………………. 14
2023–24 Annual Pricing Review ……………………………………………………………………. 14
7.0 Recommendations for a better NDIS market Stewardship ……………………………… 21
The NDIS Review: A call for reform ……………………………………………………………….. 21
The way forward ……………………………………………………………………………………. 23
Pricing reform: Ensuring transparency and sustainability ................................. 23
Workforce investment: Fostering a skilled workforce ................................. 26
Strengthening market monitoring and intervention for NDIS sustainability ............ 26
8.0 Conclusion ………………………………………………………………………………………………. 28
Contact …………………………………………………………………………………………………………. 29
National Disability Services 3
1.0 Overview
National Disability Services (NDS) welcomes the opportunity to make a submission to
the Joint Standing Committee on the National Disability Insurance Scheme (NDIS)
General Issues Inquiry.
The NDS Submission is in response to the Committee’s request for information on the
implementation, performance, governance, administration and expenditure of the NDIS.
2.0 Scope of submission
The National Disability Insurance Scheme (NDIS) has established a market for
disability supports. However, this market remains in its formative stages and faces
significant challenges. This submission focuses on the critical role of the National
Disability Insurance Agency (NDIA) in stewarding this market and ensuring it delivers
on the core objectives of the NDIS. We argue that a shift in perspective is necessary,
moving away from a purely transactional “market” language and towards a focus on
“community development” within the NDIS ecosystem. This approach emphasises
collaboration, sustainability and participant empowerment.
We make a number of practical recommendations that would improve the way in which
the NDIS market operates and better align incentives for participants, workers,
providers and government.
Recommendations
More detail on each of these recommendations is provided in Section Seven.
-
Establish an Independent Pricing Authority in alignment with NDIS Review findings.
-
Implement a cost-reflective pricing model within the new NDIS pricing and payments framework (as outlined in Action 11.1 of the NDIS Review).
-
Implement a registration supplement for NDIS Providers.
-
Fund strategic workforce development and retention.
-
Establish a sector-led reform implementation taskforce.
-
Develop a collaborative five-year NDIS implementation roadmap.
-
Create an industry transformation fund.
-
Develop a comprehensive implementation plan for a risk-proportionate regulatory framework.
National Disability Services 4
- Enhance initiatives to empower participants.
3.0 State of the disability sector
The NDS 2023 State of the Disability Sector annual survey and report, in collaboration
with the Centre for Disability Research and Policy at the University of Sydney, sheds
light on the challenges faced by disability providers. The findings depict a sector
teetering on the brink.
The report found:
-
72 per cent of not-for-profit providers and 67 per cent of for-profit providers are
worried that they will not be able to provide NDIS services at current prices.
-
34 per cent of providers made a loss in FY 2022-23; 18 per cent broke even.
-
82 per cent of respondents received requests for services that they could not
fulfil. -
78 per cent reported extreme to moderate difficulty finding support workers, with
availability of allied health professionals ranging from low to non-existent.
As the provider sector responds to the Royal Commission into Violence, Abuse,
Neglect and Exploitation of People with Disability (the Royal Commission) and NDIS
Review recommendations, the State of the Disability Sector Report point to the urgency
and significance of addressing the issues in ways that foster and build a sustainable
sector for people with disability.
Organisation finances and general operating environment
In the last three surveys, between 19 and 23 per cent of providers reported a loss. This
year, a concerning 34 per cent of providers reported a loss and just 18 per cent broke
even. This is the worst year for financial viability in the history of the survey.
Opinions about general operating conditions remain poor, with 70 per cent saying that
they have worsened in the last 12 months. When asked about the wider Australian
economy, 68 per cent say that conditions have worsened.
This underscores the challenging financial situation faced by many disability providers,
with organisations having to make tough decisions about whether they can continue
National Disability Services 5
offering services, emphasising the need for strategic interventions to ensure the
sustainability and financial well-being of service providers in the disability sector.
Most providers would place the root of this problem in pricing, especially with the rising
cost of doing business. Seventy-two per cent of not-for-profit providers and 67 per cent
of for-profit providers said they worry that they will not be able to provide NDIS services
at current prices.
Yet demand for services keeps rising. Eighty-two per cent of respondents said they had
received requests for services that they could not fulfil. The reasons they gave for
turning down services include having not enough staff (45 per cent), not enough
qualified staff (21 per cent) or not enough organisational resources or money (15 per
cent).
Quality and safeguards
Perceptions of the NDIS Quality and Safeguards Commission (NDIS Commission)
continue to lean towards the negative. Fifty per cent of respondents express
dissatisfaction with its collaboration with providers. Positive sentiments towards the
NDIS Quality and Safeguarding Framework declined in 2023, with a notable increase in
respondents (48 per cent in 2023 compared to 41 per cent in 2022) disagreeing with
the statement, “We are confident that the NDIS Quality and Safeguarding Framework
supports the quality of services/outcomes.“
Half the respondents acknowledge positive outcomes from the Commission practice
guides, while only 47 per cent believe that the behaviour support requirements to
reduce and eliminate restrictive practices are yielding favourable results.
National Disability Insurance Scheme registration
Nearly 18 per cent of respondents are considering dropping their registration with the
NDIS Commission. Services established during or after 2014 are significantly more
likely (26 per cent) to consider dropping their registration, almost double the rate for
organisations established before 2014 (14 per cent). Additionally, smaller organisations,
both in terms of headcount and turnover, and for-profit entities show a higher likelihood
of considering deregistration compared to their counterparts.
Respondents express concerns about the administrative burden, costs, lack of benefits
in registration and the perceived lack of accountability for unregistered providers. These
findings are underscored by concerns with a perceived two-tier service provider market,
National Disability Services 6
with, on the one hand, registered providers shouldering the costs and administrative
burden of registration and, on the other, unregistered providers delivering many of the
same services but with less oversight and accountability.
Recommendations from the Royal Commission and NDIS Review and, more recently,
the NDIS Provider and Worker Registration Taskforce to simplify registration should be
a priority. Notably, 77 per cent of respondents find that, collectively, NDIS pricing and
regulation hinder the provision of innovative services responsive to participant needs, a
sentiment consistent with previous years. Concerns around the regulatory environment
and quality and safeguarding framework need to be addressed urgently and carefully.
4.0 Workforce Census
NDS’s latest annual Workforce Census Report, shows that, having stabilised in 2022,
the sector’s workforce recruitment and retention problems have not eased. Providers
face serious workforce pressures as they enter a long period of NDIS reform.
The NDS Workforce Census 2024 received responses from 361 organisations
representing 67,363 disability support employees across Australia. This was the second
highest response rate in the history of the survey, due strong interest from NDS
members and the sector.
The 2024 results mostly show a continuation of previous workforce trends, but in this
case, consistency is not a good thing. Instead, these continued trends show that
workforce issues in the disability sector have become entrenched. Action on sector
reforms is urgently needed to address workforce challenges that have become a drag
on sector effectiveness.
Entrenched workforce issues threaten the NDIS
The latest NDS Workforce Census reveals concerning trends in the NDIS workforce,
characterised by staffing shortages and high turnover. This has serious implications for
the quality and sustainability of services for people with disability.
-
Overreliance on casual staff: A significant portion of the workforce (37 per
cent) are casual support workers with high turnover rates. This creates instability
within the system and hinders the building of long-term relationships with
participants.
National Disability Services 7
-
Escalating turnover: Both casual and permanent staff turnover rates are on the
rise, reaching 24 per cent and 16 per cent respectively. This annual churn of nearly 16,500 employees disrupts service continuity and creates a constant need for recruitment and onboarding, which is a costly process.
Financial viability crisis looms
The workforce challenges translate into a financial viability crisis for many NDIS
providers. Inadequate pricing, rising operational costs and high staff turnover create a
perfect storm, threatening service sustainability:
-
Losses and break-even operations: A significant number of providers (52 per
cent) reported operating at a loss or barely breaking even in FY 2022–23.
-
Delivery concerns: Due to workforce issues, almost 70 per cent of providers
express concerns about maintaining service provision at current funding levels.
-
Hidden costs of turnover: Estimates suggest providers incur over $80 million
annually in invisible costs solely due to staff turnover (including recruitment,
onboarding and lost productivity).
In the recent NDIS Review Report, ‘Working together to deliver the NDIS’, the
Australian Services Union has estimated that it can cost between $2130 and $3320 to
on-board a new staff member. Using the lower end of this estimate, this represents a
potential invisible cost of $40.5 million across the 361 organisations responding to this
year’s census. Even when excluding casual staff members, the costs still equate to
over $17 million. Using estimates of the 2022 workforce numbers, this would represent
a cost to the overall NDIS service ecosystem in the range of $80 to $190 million per
year.
The NDIS Workforce Census serves as a wake-up call. Urgent action on workforce
challenges is needed to ensure a sustainable and high-quality NDIS for all participants.
5.0 The importance of market stewardship in the NDIS
The crucial role of NDIA market stewardship in the NDIS
The role of the National Disability Insurance Agency (NDIA) as a market steward is
essential for the NDIS’s success across all stages. It acts as a guiding force for
implementation, performance, governance, administration and expenditure.
National Disability Services 8
Benefits across the NDIS lifecycle
-
Implementation: Market stewardship ensures a vibrant network of service
providers, preventing service gaps and catering to diverse needs.
-
Performance: It incentivises high-quality services through clear standards,
monitoring systems and rewards for exceptional outcomes. This fosters
innovation and efficiency.
-
Governance: Market stewardship promotes transparency and accountability by
establishing clear pricing structures, data collection and diverse provider options,
empowering participants with informed choices.
-
Administration: It creates a smoother experience for everyone, with clear
regulations, established networks and streamlined processes, reducing
administrative burdens and costs. Additionally, it allows for adaptation to
evolving needs and technologies.
-
Expenditure: Market stewardship promotes responsible use of funds by
incentivising efficient service delivery, discouraging monopolies, and
encouraging investments that demonstrably improve participant outcomes. This
helps maintain service quality while controlling costs, ensuring the NDIS’s long-
term financial sustainability.
In essence, effective market stewardship is the invisible hand that shapes the NDIS into
a program that delivers quality services efficiently and sustainably for all participants.
A well-functioning NDIS market, fostered through effective stewardship, contributes to
four key goals:
-
Informed participant choice and control: Participants deserve clear
information about available service offerings. This empowers them to make
informed decisions about their NDIS supports, selecting services that best meet
their individual needs and goals.
-
High-quality services and improved participant outcomes: Effective market
stewardship incentivises providers to deliver high-quality services that are
evidence-based and demonstrably improve participant outcomes. This requires a
workforce with the necessary skills, experience and qualifications. A sustainable
disability sector, supported by fair pricing structures, allows providers to invest in
National Disability Services 9
staff training, professional development and innovative service models that
optimise participant well-being and independence.
-
A sustainable workforce and flourishing disability sector: A thriving NDIS
market fosters a robust and sustainable workforce within the disability sector. It
needs fair wages, attractive career pathways and strong professional
development opportunities. A well-managed market incentivises investment in
staff, leading to higher retention rates, improved morale and, ultimately, better
quality care for participants. Furthermore, a flourishing disability sector fosters
innovation and attracts new entrants with fresh ideas and approaches to
disability support.
-
Accessibility for all participants and safeguarding of rights: All NDIS
participants, regardless of location, disability type or background, deserve
equitable access to a diverse range of quality support options. Effective market
stewardship ensures that services are geographically accessible and cater to a
wide range of needs. It also prioritises participant safety and well-being through
robust safeguards that protect participants from exploitation and ensure service
providers adhere to ethical and professional standards.
The current NDIS market faces challenges that hinder its ability to fully achieve these
goals. Two notable hurdles include:
-
Workforce shortages and low wages: The disability support sector struggles
with workforce shortages and low wages. This can have a significant impact on
the quality and sustainability of services. Low wages make it difficult to attract
and retain qualified staff, leading to high staff turnover and potentially
compromising the quality of care participants receive.
-
Pricing structure that discourages investment: The price regulation system
does not adequately reflect the true cost of delivering high-quality services. This
can disincentivise providers from investing in innovation, staff training and
service excellence. If price caps are set too low, providers may struggle to cover
the costs associated with employing, training and retaining a qualified workforce.
This can lead to a race to the bottom, where providers prioritise cost-cutting
measures over quality investments.
National Disability Services 10
Effective market stewardship holds the potential to address these challenges cultivate a
vibrant NDIS market that empowers participants with informed choice, high-quality
services and support a flourishing disability sector that prioritises their well-being and
independence.
Conflict of Interest: Setting fair prices while containing Scheme costs
The NDIA’s role in the NDIS market presents a potential conflict of interest that hinders
effective market stewardship. This conflict arises from the NDIA’s dual responsibility:
1. **Budget management:** The NDIA sets the overall budget for the NDIS, aiming to
ensure its long-term financial sustainability.
2. **Market stewardship:** The NDIA oversees the functioning of the NDIS market,
aiming to foster competition, service quality and participant choice.
This duality can create a conflict in the following ways:
-
Price setting and budgetary pressure: The NDIA sets price caps for NDIS
services. If the NDIA prioritises budget control, they might set price caps that are
too low to incentivise high-quality providers to enter or remain in the market. This
could lead to a race to the bottom, where providers prioritise cost-cutting over
service excellence.
-
Data bias: Metrics used to assess market health, such as provider payment
activity, might be heavily influenced by the NDIA’s own budget framework. This
could lead to a situation where the NDIA prioritises metrics that reflect a low-cost
market, even if it comes at the expense of participant well-being and service
quality.
-
Limited incentives for innovation: With a focus on financial sustainability, the
NDIA might be less likely to support innovative service models or price structures
that could benefit participants in the long run, even if these models require
upfront investments.
Participants ultimately bear the brunt of the NDIA’s potential conflict of interest. Tight
budget controls might lead to lower price caps, discouraging investment in qualified
staff and ultimately reducing service quality. Additionally, there is limited choice if price
caps restrict new providers from entering the market. This can leave participants with
fewer options and limited access to specialised services. Most importantly, a perception
National Disability Services 11
that the NDIA prioritises finances over participant well-being can erode trust in the
entire NDIS system.
Business dynamism: A sign of a healthy market?
As discussed previously, effective market stewardship is essential for the NDIS to
achieve its goals. While the NDIA has undertaken efforts to regulate the market,
challenges persist. This section delves into one of the NDIA’s measures of market
health: business dynamism of registered providers. While valuable, this metric has
limitations in fully capturing the market’s condition.
Key metrics from the 2023–24 Annual Pricing Review report include:
-
High continuity among key providers
- A significant portion (38 per cent) of registered providers have consistently
received payments over a three-year period, indicating market stability.-
These consistent providers account for a substantial share (75 per cent) of
total payments, suggesting they are crucial players in the market.
-
This high continuity allows the NDIA to focus on established providers with a
proven track record, simplifying market oversight.
-
Shift towards larger providers
-
The data shows a trend towards registered providers serving more
participants.
-
This suggests a consolidation in the market, with a smaller number of
providers.- The NDIA needs to ensure larger providers maintain quality service delivery
while managing a larger client base.- This might require the NDIA to implement regulations or incentives that encourage quality care despite growth.
-
-
Limited provider exit
-
The rate of inactive providers claiming zero DSW payments suggests many
“exit” from the DSW market altogether, rather than just offering other NDIS
services. -
National Disability Services 12
-
Low exit rate (0.2%) indicates a relatively stable market composition, which
can be positive for continuity of care. * While stability is good, the NDIA should monitor if this low exit rate hinders new provider entry or market innovation. * The NDIA might need to explore reasons for provider exits to understand if any market barriers exist.-
Focus on smaller providers
- The data reveals a significant number of inactive providers previously
received low DSW payments (under $10,000 per half-year).-
This suggests smaller providers might struggle to compete or find
sustainability in the market.
-
The NDIA needs to consider policies that support smaller providers,
especially those serving niche needs or regional areas.- This could involve exploring alternative funding models or simplifying
administrative processes for smaller providers.
-
Business dynamism data, though informative, offers a limited view of NDIS market
health. It tracks provider activity through payments, not service quality, and focuses on
overall market exits, missing struggles within specific service categories. New entrants
might not represent innovation, and established providers might innovate without
frequent market churn. Additionally, national data can mask regional issues with
provider availability or competition. For effective market stewardship, the NDIA needs a
more comprehensive approach.
6.0 Strategic pricing for a sustainable NDIS
The NDIS aims to empower participants through a market-driven approach. However,
ensuring a well-functioning market requires effective stewardship by the NDIA. This
section will delve into key areas where the current approach to market stewardship
presents challenges and opportunities for improvement.
National Disability Services 13
Pricing and its impact on the market
The current approach to market stewardship in the NDIS, which relies heavily on fixed
price caps, faces some limitations. These limitations hinder the overall effectiveness of
the market in providing quality services for participants.
-
Limited choice and competition: Price caps discourage new providers from
entering the market or from delivering certain types of supports, to certain
participant cohorts or geographic locations. This reduces the diversity of service
options available to participants.
-
Disincentivising quality: The system does not adequately reward providers
who invest in quality improvements and deliver services that maximise
participant outcomes.
-
Incomplete cost picture: The pricing model does not fully consider the true cost
of providing high-quality support services. This includes factors like attracting,
training and retaining qualified staff.
-
Inadequate recognition of complexity: The pricing structure fails to adequately
recognise the additional costs of supporting participants with high and complex
needs. This can lead to a situation where providers are unable to deliver
essential services due to financial constraints.
2023–24 Annual Pricing Review
The NDIS Annual Pricing Review is a critical exercise undertaken by the National
Disability Insurance Agency (NDIA) to ensure that the pricing structure of the NDIS
remains fair and sustainable, balancing the needs of participants, service providers and
the overall scheme’s financial health.
NDS’s submission to the 2023–24 Annual Price Review (APR) outlined a clear
roadmap for a sustainable NDIS, prioritising quality service provision. The submission
described a disability sector at breaking point.
Providers are reporting their worst financial year ever. More organisations are running a
deficit and far fewer are breaking even. Financial reserves, often built up over decades
with the support of local communities, dwindle as providers struggle to make ends
meet. More providers are concerned that they will not be able to provide support at
current NDIS prices.
National Disability Services 14
However, the NDIA’s final decisions fell short, raising serious concerns about the future
of the scheme.
The NDIA 2023–24 Annual Pricing Review report notes the following:
* **Market growth and challenges**
* The NDIS market is experiencing significant growth, with both registered
and unregistered providers seeing increases in numbers and claim
amounts. This indicates a market that is adapting to meet rising demand.
* However, a potential concern arises from the decline in registered
providers despite their increased claim amounts. This suggests a shift
towards unregistered providers, which may raise questions about quality
control and consistency.
* **DSW Cost Model Scrutiny**
* The DSW Cost Model, used to set price limits for DSW services, faces
criticism for potentially underestimating provider costs. Stakeholders point
to factors like underestimated corporate overheads, lack of differentiation
for complex needs, and setting efficiency levels that may not reflect
current market realities.
* In response, the NDIA seeks to improve the model by incorporating data
from recent surveys and mandated reporting from not-for-profit
organisations. However, challenges remain in accurately capturing costs
across diverse provider structures and differentiating NDIS-specific
activities from broader organisational functions.
* **NDIS pricing reform on the horizon**
* The Australian Government acknowledges the need for reform in NDIS
pricing structures. This aligns with initiatives like the Department of Social
Services' Pricing and Payments Framework and the Independent Health
and Aged Care Pricing Authority's (IHACPA) planned work for 2024–25.
These initiatives aim to improve efficiency, effectiveness and data-driven
decision-making.
* **Support coordination in flux**
* The NDIS Review highlighted inconsistencies in support coordination
delivery. While the number of providers, particularly Level 2 providers, has
National Disability Services 15
significantly increased, there are concerns with cost pressures and
maintaining service quality under the current financial model.
* Acknowledging the upcoming reforms proposed by the NDIS Review, the
report advises against developing a specific cost model for support
coordination at this time. This aims to minimise disruption during the
transition to a potentially revamped intermediary service structure.
Despite the number of submissions received from providers and peak bodies and the
presentation of independent benchmarking data, the APR failed to understand the
needs of the sector:
-
Financial stability: Our submission highlighted the financial crisis gripping
providers. Many reported their worst year ever, with deficits rising and reserves
dwindling. Despite acknowledging the need to address these issues, the NDIA’s
response lacked the urgency required.
-
Quality over quantity: We emphasised the importance of pricing that
incentivises quality care. This includes fair wages, staff development and robust
quality assurance measures. Unfortunately, the NDIA’s approach prioritises
quantity of services over the quality of services delivered.
-
Cost-reflective pricing: NDS proposed adjustments to reflect rising costs
across the board, including CPI, wages and overhead expenses. The NDIA’s
minimal price increases fail to cover these rising costs, putting further strain on
providers.
The results of the recent pricing review are a missed opportunity to invest in a
sustainable disability support sector:
- Limited price increases: NDS called for full CPI and WPI adjustments, but the
NDIA only implemented a partial increase. This leaves providers struggling with
inflation and rising wages.
-
Rejection of quality incentives: NDS proposed supplements for registered and
intermediary providers to incentivise high standards. The NDIA’s rejection of
these proposals sends a worrying message about their commitment to quality.
National Disability Services 16
-
Stagnant pricing for crucial services: The freeze on prices for therapy, plan
management and support coordination creates a funding gap, jeopardising
access to these vital services for participants with complex needs.
This inadequate funding ultimately results in:
- Loss of quality providers: High-quality providers, unable to absorb rising costs,
may be forced to leave the NDIS. This creates a double whammy for participants
— reduced access to essential services and a potential increase in unregulated
or unqualified providers.
-
Deterioration in service quality: Without proper funding, service quality
inevitably suffers. This jeopardises participant safety and well-being, the very
foundation of the NDIS.
Annual Price Review Pulse Survey shows most providers reconsidering their
futures
Following the release of the APR, NDS conducted a Pulse Survey to assess the impact
that the decision would have on providers and the participants that they support. The
Pulse Survey revealed a shift in thinking — from finding ways to cut budgets without
cutting corners to seriously considering cutting services entirely.
Unhappiness and anger over pricing was unmistakable in many responses: “The NDIS
price system is a cruel joke that is putting the most vulnerable at the most risk and
slow[ly] crushing the quality providers to death” [multi-state provider].
The survey drew responses from small to large operators from every state. Of the 1258
responses to the question, Are you actively reconsidering your organisation’s future as a result of the new price limits? 84 per cent (1062) said yes and just 10 per
cent said no.
National Disability Services 17
Are you actively reconsidering your organisation’s
future as a result of the new price limits?
(Chart visual showing 84% Yes, 10% No, 6% Don’t know)
| Are you actively reconsidering your organisation’s future as a result of the new price limits? | Number | Per cent |
|---|---|---|
| Yes | 1,062 | 84 per cent |
| No | 124 | 10 per cent |
| Don’t know | 72 | 6 per cent |
| Total | 1,258 | 100 per cent |
The second question dealt more directly with service delivery: Are you considering stopping some or all of your disability services as a result of the new price limits? Three-quarters of respondents said that they were thinking about cutting services, 14 per cent said they didn’t know, and just ten percent said no.
National Disability Services 18
Are you considering stopping some or all of your
disability services as a result of the new price limits?
(Chart visual showing 75% Yes, 11% No, 14% Don’t know)
| Are you considering stopping some or all of your disability services as a result of the new price limits? | Number | Per cent |
|---|---|---|
| Yes | 940 | 75 per cent |
| No | 137 | 11 per cent |
| Don’t know | 181 | 14 per cent |
| Total | 1,258 | 100 per cent |
The third question asked those who are considering cuts to services for more detail
about the types of services they might cut, when they might cut them, the effects of
their cuts to regional and remote services, and how many participants might be
affected.
Their responses gave a complex picture of service delivery, with financial and other
pressures coming from all sides and a range of strategies under consideration for
survival.
For one WA provider, the APR decision was just one more reason to stop supporting
NDIS participants altogether, citing “lack of clarity, additional time requirements, no
National Disability Services 19
stable supports, poor NDIS staff training, payment limits below other funding … and the
seemingly very dodgy push to move to large providers…”
For most providers, costs rising faster than prices is the crucial issue. One Victorian
organisation claiming a loss of $870,000 in the last financial year, said that price
increases did not cover the 1 July wage increases for long-term staff, “without
beginning to consider insurance, energy bills, Workcover, etc … If we don’t turn things
around in the next 12 months, we will likely close before end of FY24–25…”
One regional NSW provider, who is considering its options, admits that closing its doors
is one of them: “This [would] impact significantly not only [our] participants and their
families but also the staff that would be out of a job.”
As we have seen in previous surveys, unrealistic pricing unfairly affects registered
providers, who have extra compliance costs: “I am being forced to de-register my
business as I can no longer afford the costs associated with this expense.” [Vic.
provider].
In the past, many organisations have cross-subsidised services, moving funds from one
area with profits to NDIS services that are making a loss. The survey shows that
financial juggling of this type has reached its limit: “While in previous years the slight
margin we receive through SIL was able to subsidise other services, this year shrinking
funding has meant we can no longer rely on this” [NSW provider].
As narrow margins turn into losses, providers look to cut travel to support participants:
“Will no longer travel further than what is billable. Used to absorb this expense” [SA
provider]. Many rightly pointed out that limiting travel will hit regional and remote
services most.
Another solution being considered is downsizing — “To save the business [we] will
need to reconsider size of business, moving to smaller premises” [Qld provider]. Laying
off staff is now an option for many organisations: “[We] will need to reduce hours for all
staff, if not make them redundant, with no price increase for capacity-building supports”
[NSW provider].
Other providers are moving their businesses away from disability to aged care, where
“[t]he wages are higher so it’s easier to attract staff, pricing is higher, and the margins
are better. And there is less red tape and less likelihood of unreasonable fines being
imposed” [Multi-state provider].
National Disability Services 20
Responses indicated that those participants at gravest risk of cuts include those
needing the most support. One NSW provider will be telling participants who depend on
complex, high-intensity supports that they will soon “cease any unfunded supports …
reduce unfunded nursing support, reduce ratios in SIL that have previously been
covered and now not funded in plans, [and may make] … changes to staffing (use of
agency, etc.).”
For participants with complex behaviours, the pricing does not recognise the specialist
skills to support them: “Given the inability to claim high-intensity support for participants
with complex behaviours, we will be looking to cease servicing these existing
participants and refusing to accept new participants with complex behaviours” [Tas.
provider].
And participants in regional, remote and rural areas will feel the brunt of withdrawn
services: “65 [per cent] of our clients are rural and remote. If we close our doors there
aren’t any other local providers to fill the gap. [Six] years of price freeze, with current
inflation, is killing us” [SA provider].
Many providers, however, are determined to keep providing high-quality services, even
if it means losses. While this approach is admirable and in keeping with the ethos of the
sector, it is not sustainable.
7.0 Recommendations for a better NDIS market
Stewardship
The NDIS Review: A call for reform
The NDIS Review has been clear: the Australian Government needs to clarify the roles
of relevant agencies for administration market stewardship, pricing, policy, regulation,
commissioning and legislation.
The NDIS Review identified limitations in the current approach to market stewardship,
particularly price caps. Analysing the Review’s recommendations on pricing reform can
provide valuable insights.
Key considerations
- Exploring alternative pricing models: The Review might suggest exploring alternative pricing models that move beyond fixed price caps.
National Disability Services 21
- Focus on quality and innovation: The Review likely emphasises the need for pricing models that incentivise quality care and foster innovation in service delivery.
The NDIS Review Panel envisions a more active role for governments in overseeing
the NDIS market. This means governments should act as stewards to ensure the
market functions effectively and benefits everyone.
The Panel acknowledges that different government agencies have varying roles in
market stewardship. While the Department of Social Services sets market policy, other
agencies like the NDIA and the Quality and Safeguards Commission play a role in:
- providing information and guidance to market participants
- implementing NDIS policy
- monitoring the market’s performance
- acting when the market malfunctions.
The NDIS Review proposes a comprehensive approach to address shortcomings in the
market, with a focus on reforming pricing and payment structures to incentivise quality
service delivery. The key recommendation is **Recommendation 11: Reform pricing
and payments frameworks to improve incentives for providers to deliver quality
supports to participants**. This recommendation includes several action items:
- Action 11.1: The Department of Social Services should develop a new NDIS pricing and payments framework, administered by the National Disability Insurance Agency and the Independent Health and Aged Care Pricing Authority. This framework should include better ways to pay providers, promoting efficient and high-quality supports with a focus on continuity of supply.
- Action 11.2: The National Disability Insurance Agency should progressively implement preferred provider arrangements for capital supports. This leverages the government’s buying power and streamlines access for participants.
- Action 11.3: The Australian Government should transition responsibility for advising on NDIS pricing to the Independent Health and Aged Care Pricing Authority (IHACPA). This strengthens transparency, predictability, and alignment with best practices in other sectors.
National Disability Services 22
- Action 11.4: The Australian Government should continually review and refine the pricing and payments framework as market conditions evolve, ensuring its effectiveness in a dynamic environment.
By implementing these recommendations, the NDIS can create a market that
incentivises quality care, fosters sustainability and delivers better outcomes for all
participants.
The way forward
Systemic reform and investment are essential. The current system is demonstrably
unsustainable. NDS calls for a multi-pronged approach involving sector-wide reform
and supportive measures:
- Pricing reform: NDIS pricing needs a significant overhaul to reflect the true cost of delivering quality services, especially for providers supporting participants with complex needs.
- Workforce investment: Training, supervision and retention strategies for highly skilled practitioners are crucial but currently underfunded.
- Market monitoring and intervention for sustainability: NDS advocates for government support over the next five years to transform the NDIS sector and fosters a market that delivers quality care, offers choices and remains sustainable.
Pricing reform: Ensuring transparency and sustainability
**Recommendation: Establish an Independent Pricing Authority in alignment with
NDIS Review findings**
The NDIS Review highlighted the need for a reformed pricing framework to incentivise
quality care and ensure a sustainable NDIS market. This recommendation directly
addresses these concerns by transitioning the responsibility for advising on NDIS
pricing to the Independent Health and Aged Care Pricing Authority (IHACPA) echoing
Action 11.3 of the NDIS Review.
Why an Independent Pricing Authority?
- Transparency and objectivity: IHACPA, independent of the NDIA’s budget pressures, would set prices based on objective data. This includes the true cost
National Disability Services 23
of delivering high-quality services (staff wages, training, quality assurance) and
regional variations. This transparency fosters trust within the NDIS market.
- Fairness and predictability: IHACPA would ensure fair and predictable pricing for providers, eliminating the potential for underfunding of quality services. This allows providers to invest in their workforce and resources, ultimately benefiting participants.
- Alignment with best practices: Like models in healthcare and aged care, an IHACPA aligns with best practices for price setting in social service sectors. This fosters a more efficient and sustainable market.
- Focus on quality and efficiency: IHACPA can consider factors beyond just cost, such as quality benchmarks and service efficiency. This incentivises providers to invest in staff training, quality assurance measures and innovative practices that improve participant outcomes.
The case for urgent change
The NDIS Review emphasises the need for immediate action. While the establishment
of an independent pricing mechanism may take time, the NDIS can implement interim
measures to ensure fairer pricing and incentivise quality care. These could include:
- Cost modelling transparency: Increase transparency in the NDIS cost modelling process, allowing providers to better understand how prices are set.
- Piloting outcome-based funding models: Explore pilot programs that reward providers for achieving positive participant outcomes, not just service delivery.
- Upfront payments for providers: Consider implementing upfront payments for providers, based on participant plans, to improve cash flow and reduce financial strain.
**Recommendation: Implement a cost-reflective pricing model within the new NDIS
Pricing and payments framework (as outlined in Action 11.1 of the NDIS Review)**
This framework, co-administered by the NDIA and IHACPA, should incentivise
providers to deliver high-quality supports to participants.
The pricing system often fails to account for the full cost of delivering quality care. This
financial strain on providers can lead to:
National Disability Services 24
- Staff shortages: Difficulty attracting and retaining qualified staff due to under- competitive wages.
- Reduced training: Lowered investment in staff development, potentially impacting service quality.
- Compromised service quality: Limited resources lead to a decline in service delivery standards.
Adopting a cost-reflective pricing model achieves a trifecta of benefits. Firstly, financial
stability for providers allows them to invest in their staff, resources and quality
assurance measures. This creates a sustainable market environment where providers
can deliver high-quality services consistently.
Secondly, competitive pricing attracts and retains reputable providers, fostering a wider
range of service options for participants.
Finally, a financially healthy network of providers able to achieve efficiency over time
ensures the long-term viability of the NDIS scheme itself, benefiting participants for
years to come.
Recommendation: Implement a registration supplement for NDIS Providers
Underfunded NDIS pricing creates a vicious cycle. Providers struggle financially,
leading to staff shortages and reduced training. This ultimately results in compromised
service quality for participants who rely on the NDIS.
To address financial strain on NDIS providers, a registration supplement is proposed.
This fixed percentage increase on claims would be paid directly to providers, boosting
their finances without impacting participant plans. Two payment methods are
suggested: providers claiming based on verified claims or an automated NDIA system.
The supplement percentage needs careful analysis to avoid unintended consequences.
A sunset clause could be implemented for review after a set period.
Benefits of the supplement include:
- improved provider sustainability allowing investment in staff, training, and quality assurance
- enhanced market attractiveness attracting more providers and potentially driving innovation
- NDIS market stability fostering a healthy environment for participants.
National Disability Services 25
This proposal is one piece of a broader reform picture, alongside cost-reflective pricing
and an independent pricing authority, for a sustainable NDIS market.
Workforce investment: Fostering a skilled workforce
Recommendation: Funding for strategic workforce development and retention
Attracting and retaining disability sector workers with the right values and skills remains
an issue. The demand across the care and support sectors will only increase, while
wages and conditions reflect the low value that the community places on these careers.
Current NDIS pricing does not support investment in training, support and supervision.
The NDIS Review underscored the pressing need to address the significant workforce
shortages in the disability sector. It remains one of the fastest growing workforces in
Australia. Within the next three years, it is estimated that another 128,000 workers (or a
40 per cent increase in workforce size) will be required to meet NDIS demand. This
challenge is compounded by high turnover rates, which see many workers leave the
sector each year. It is expected that the disability sector will lose between 198,000 to
292,000 workers by 2025.
NDS strongly supports an integrated approach to develop the workforce of the care and
support economy, using sector-specific strategies for guidance and to add nuance to
this. Although the aged care and early childhood sectors have well-established
workforce strategies supported by government, the disability sector is at the start of the
journey to developing a NDIS Workforce Strategy.
There is an opportunity to leverage work being undertaken to develop the National Care
and Support Economy Strategy to co-design, fund and implement a disability workforce
strategy. This strategy should consider mechanisms to fund training and worker support
that is responsive to individual participant and worker needs, the provider context and
the place where support is being delivered.
Strengthening market monitoring and intervention for NDIS sustainability
Recommendation: Establish a sector-led reform implementation taskforce
Convene a group of stakeholders, including people with disability, advocacy
organisations, unions, service providers, and experts, to advise the NDIA on market
monitoring and intervention strategies.
National Disability Services 26
**Recommendation: Develop a collaborative five-year NDIS implementation
roadmap**
This recommendation proposes collaborating with the NDIS Taskforce to create a
public five-year implementation roadmap for the NDIS reforms. This roadmap should be
data-driven and prioritise the following key elements:
- Monitoring and evaluation: Establish a framework for ongoing data collection and analysis to track progress towards achieving NDIS goals.
- Early intervention strategies: Develop and implement strategies for early identification of needs and proactive intervention to improve participant outcomes.
- Targeted interventions: Address service gaps and quality issues through targeted interventions based on identified needs and data insights.
- Promoting provider diversity: Foster a diverse range of service providers within the NDIS to ensure participants have access to a wider selection of high- quality options.
- Sequencing of reforms: Clearly outline the sequence of NDIS reforms over five years to ensure a smooth and strategic transition.
- Stakeholder consultation: Prioritise ongoing engagement with stakeholders, including participants, families, providers, and the community, throughout the implementation process.
- Minimising disruptions: Mitigate potential disruption to participants and providers by communicating changes effectively and providing necessary support during the transition period.
Recommendation: Create an industry transformation fund
Establish a fund to support structural adjustments required for a sustainable market,
prioritising workforce development, infrastructure investments for service providers and
innovation in service delivery models.
**Recommendation: Develop a comprehensive implementation plan for a risk-
proportionate regulatory framework**
Establish a new NDIS regulatory framework with a detailed implementation plan that
includes clear timelines, responsibilities and milestones. This plan should focus on:
National Disability Services 27
- defining risk-based regulations and factors promoting quality services
- implementing a universal provider registration process with varying categories based on risk
- conducting thorough suitability assessments for providers
- establishing ongoing monitoring, support and compliance mechanisms for all providers
- regularly reviewing the framework’s effectiveness and making adjustments.
Recommendation: Enhance initiatives to empower participants
Invest in programs that build consumer and community capacity. Provide ongoing
support and training to equip participants with the knowledge and skills to navigate the
NDIS marketplace and make informed choices about their plans.
8.0 Conclusion
The NDIS has the potential to be a beacon of hope and empowerment for people with
disability. However, the market dysfunction threatens to undermine this potential.
Achieving the reform agenda will require structural adjustment across most aspects of
service delivery. Careful deliberation, collaboration and co-design will be necessary to
implement its recommendations effectively. Providers need a seat-at-the-table to
ensure changes can be safely and practically implemented and all stakeholders must
work together to ensure high-quality, equitable and sustainable supports that provide
choice, control and independence to people with disability.
Effective market stewardship by government, the NDIA and the NDIS Commission is
central to the success of the NDIS. By implementing the recommendations outlined
above, a thriving NDIS market that empowers participants, strengthens the disability
sector and delivers high-quality, impactful supports can be cultivated. This, in turn, will
enable participants to live more independent and fulfilling lives.
The NDIS Review offers a clear roadmap for reform, with the establishment of an
independent pricing body as a critical first step. By implementing these
recommendations, we can ensure the NDIS delivers on its core promise: quality care,
security, and choice for all participants. The time for decisive action is now. We cannot
National Disability Services 28
afford to wait and watch as the NDIS market crumbles, failing the very people it was
designed to support.
Contact
Laurie Leigh
CEO
National Disability Services
Friday, 12 July 2024
National Disability Services 29